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5 ways to grow your income by 20 percent

Originally posted by PWW:

One of the things I like most about the new Yahoo! Finance format is the immediate feedback I get from readers. Just last month, my column "Five Ways to Save $2,500 in 20 Minutes" received enormous positive feedback.

I also received comments from concerned readers who basically said, "Your ideas won't work for me -- what else can I do to stop living from paycheck to paycheck?"

These readers certainly aren't alone. I completely understand that too many people today simply can't make ends meet with the salary they're earning. If that's the case, it's time to consider ways to grow your income.

Meet the Egglestons

Over the past year, I've had the honor and pleasure of appearing on The Oprah Winfrey Show as an expert money coach for her Debt Diet series. The mission of this life-changing program is to start a worldwide movement helping millions of people get out of debt and finally realize their goal of true financial freedom.

On the show, I coached an amazing couple -- Dan and Sally Eggleston. Dan and Sally are both elementary school teachers earning a combined income of $92,000, and live in Indiana, where they're raising three wonderful kids. When I first met them a year ago, they were $100,000 in debt and on the brink of bankruptcy.

Working together, we managed to find ways to cut back on about $500 of unnecessary expenses each month (using what I call the Double-Latte Factor). That was a great start. But due to the huge amount of debt Dan and Sally had accumulated, they had to do more.

In order to make measurable progress toward paying down all their debt, they not only needed to seriously cut back on their expenses, they also required a solid plan to grow their income by at least 10 percent over the year. The Egglestons didn't just succeed -- they crushed my goal by growing their income by over 20 percent!

Grow Your Income, Not Your Lifestyle

I'm going to coach you through the same steps I used for the Egglestons, but first I want to stress an important point that can make or break your success.

Please read closely: Earning more money won't make a bit of difference if you don't save it or apply it to paying off your debt. Many people fall into the trap of "the more you make, the more you spend." It's a vicious cycle that will keep you living from paycheck to paycheck regardless of how high your salary is. The bottom line is that you've got to grow your income, but not your lifestyle if you want to make financial progress.

Now for the five steps the Egglestons followed to grow their income:

1. Change your thinking by asking better questions.

Often, when we're struggling financially we ask the wrong questions. Asking negative questions like why you're always broke or can't get a raise can lead to negative answers. If you believe you can't make more money and consequently do nothing to change, you'll prove yourself right. If you think it's just too hard, it will be.

But if, instead, you empower yourself by asking, "What can I do to make more?" then you'll change your life. I asked Dan and Sally, "What can you do to earn more money" They focused on the answer, and together we went to work on their plan.

It took a lot of work (theirs, not mine): Dan picked up an additional coaching job and grew his summer lawn-care business, while Sally picked up summer school teaching jobs and started a mini-eBay business. It wasn't easy for them, but they did it.

2. Start a side business.

Starting your own side business for extra money doesn't have to be complicated, nor does it have to take a lot of money.

For instance, a few years ago Dan started his own lawn-care service in the summer months with just a lawnmower. He created some flyers, knocked on a few doors in the neighborhood, and soon enough he was in business. Sally taught herself how to open an eBay seller's account and in a matter of hours started selling used clothing online.

Depending on your interests and abilities, there are all sorts of things you can do to develop an additional income stream. You can perform a service (like painting houses or editing resumes), make something and market it (like cookies or jewelry), and buy something and resell it (think eBay or Amazon.com).

You can even turn a hobby into a side business -- if you cook you can cater, and if you sew you can do tailoring. Be creative and see what else you can come up with.

3. Raise your rates.

If you have a business or service you offer right now, raise your rates. It's the fastest way I know to earn more money, and it helped Dan immediately.

He'd been running his lawn-care business for five years, and not once in that time had he raised his fee. I coached him on how to go about increasing his rates without losing business.

He started out by writing a letter to his customers, letting them know how much he appreciated their business and loyalty over the years. He simply shared with them that in order to keep up with the rising cost of gasoline and other expenses, he would be raising his rates by 10 percent this year.

Dan not only retained all of his current customers, but got a few new referrals as well. The business ended up pulling in an additional $2,000 in profits compared to the previous year.

It's time give yourself a raise. If you think your customers wouldn't stand for it, consider Dan's experience. Right now, someone somewhere is raising the price he charges for his services. Why aren't you?

4. Get extra work -- at work.

As I mentioned before, Sally and Dan are both teachers. Sally asked her district about teaching summer school and landed a position that earned her an extra $4,200. Dan signed up to coach his school's baseball team and earned another $4,900.

You don't have to be a teacher to find opportunities like these. Ask about overtime or additional projects that you might be considered for. Can you increase your hours or work an extra shift? You won't know until you ask.

5. Get a raise.

Unfortunately, if you work for a union or government agency, this advice might not apply.

But for everyone else, nothing will increase your income faster than getting a raise. Dan recently completed his bachelor's degree, which earned him a whopping 30 percent increase. While you may not have earned a new degree, getting a raise can still be as simple as asking for one.

Start by preparing yourself for a meeting with your boss. Know exactly how much you want to ask for, and consider putting it in percentage terms. A humble request for a 5 percent raise starting in the next 90 days may be easier for your boss to handle than a demand for $2,500 more per year -- even if both amount to the same thing.

Have confidence in yourself. After all, you're a hard-working, dedicated employee, right? Consider that it will probably cost your employer more to replace you than it would to give you the raise you deserve.

Share Your Story

The Egglestons' story has a happy ending. They managed to grow their income by $19,000 in 12 months, and they've paid off $26,000 in credit card debt so far and are well on their way to becoming millionaires. Dan and Sally took a seemingly hopeless situation and turned it into a true success story -- and you can too.

I'd love to hear how you were able to increase your income. Post a comment and share your success. My goal is for this column to become a positive place for readers to learn from others and grow in the process.